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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Thermo Fisher Scientific Inc was -1.12. The lowest was -2.88. And the median was -2.48.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Thermo Fisher Scientific Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 0.9871||+||0.528 * 0.9522||+||0.404 * 1.2464||+||0.892 * 1.2902||+||0.115 * 0.8817|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1011||+||4.679 * -0.0173||-||0.327 * 1.0425|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $2,474 Mil.|
Revenue was 4492.8 + 4171.4 + 4321.9 + 3903.5 = $16,890 Mil.
Gross Profit was 2091.9 + 1933.6 + 1846.5 + 1620 = $7,492 Mil.
Total Current Assets was $6,540 Mil.
Total Assets was $42,852 Mil.
Property, Plant and Equipment(Net PPE) was $2,427 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,685 Mil.
Selling, General & Admin. Expense(SGA) was $4,896 Mil.
Total Current Liabilities was $5,350 Mil.
Long-Term Debt was $12,352 Mil.
Net Income was 601.2 + 471.6 + 278.5 + 543.1 = $1,894 Mil.
Non Operating Income was 4.9 + 5.2 + 1.5 + 4.8 = $16 Mil.
Cash Flow from Operations was 953.7 + 676 + 888.7 + 101.2 = $2,620 Mil.
|Accounts Receivable was $1,942 Mil.
Revenue was 3466.9 + 3191.8 + 3240.1 + 3191.5 = $13,090 Mil.
Gross Profit was 1481.7 + 1347.9 + 1363.2 + 1336.3 = $5,529 Mil.
Total Current Assets was $9,881 Mil.
Total Assets was $31,863 Mil.
Property, Plant and Equipment(Net PPE) was $1,767 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,000 Mil.
Selling, General & Admin. Expense(SGA) was $3,446 Mil.
Total Current Liabilities was $3,126 Mil.
Long-Term Debt was $9,500 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(2473.6 / 16889.6)||/||(1942.3 / 13090.3)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(1933.6 / 13090.3)||/||(2091.9 / 16889.6)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (6539.8 + 2426.5) / 42852.1)||/||(1 - (9880.7 + 1767.4) / 31863.4)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(999.9 / (999.9 + 1767.4))||/||(1684.8 / (1684.8 + 2426.5))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(4896.1 / 16889.6)||/||(3446.3 / 13090.3)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((12351.6 + 5349.8) / 42852.1)||/||((9499.6 + 3126) / 31863.4)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(1894.4 - 16.4||-||2619.6)||/||42852.1|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Thermo Fisher Scientific Inc has a M-score of -2.28 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Thermo Fisher Scientific Inc Annual Data
Thermo Fisher Scientific Inc Quarterly Data